Standard Chartered Revises Forecast, Now Expects ECB Rate Hike in December

Standard Chartered has revised its monetary policy outlook for the European Central Bank, now forecasting a 25 basis point interest rate hike in December. The bank, which previously anticipated the ECB would hold rates steady, now expects the deposit rate to rise to 2.75%.

Inflation and Economic Data Drive Revision

The change in forecast follows the release of higher-than-expected euro zone inflation data for September. According to reports, rising energy prices were a primary driver behind the stronger-than-anticipated inflation reading.

In addition to price pressures, recent business activity data has indicated that the region's economy is holding up better than earlier projections suggested. This perceived economic resilience provides a stronger basis for the central bank to pursue further monetary tightening to combat inflation.

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Alignment with Market Consensus

With this revision, Standard Chartered’s view now aligns with the broader consensus among major Wall Street banks, which also widely anticipate another rate increase from the ECB before the end of the year.

The forecast comes after the ECB, along with other global central banks, raised interest rates last month. Policymakers have remained focused on addressing inflation risks linked to elevated energy costs and continued economic growth.